WhatsApp starts operator partnerships

Monday 17 September 2012 | 12:14 CET | Market Commentary

Hong Kong mobile operator 3 has introduced a new data bundle, the WhatsApp Roaming Pass. This gives the user unlimited use of WhatsApp, whether they have a data plan or not. Use in Hong Kong alone costs HKD 8 per month (EUR 0.80). International use, on 93 networks in 78 markets, costs HKD 48 per month (EUR 4.80).

The new plan offers 3 HK a way to profit from the growing popularity of the chat service and helps to offset the sharp drop in SMS revenues. WhatsApp is likely also sharing in the revenues, enhancing its business model. To date the company has relied on the cost for downloading the WhatsApp app, which costs 99 cents for iPhone and Symbian (the Android and Windows Phone versions are free the first year). For WhatsApp, which recently passed 10 billion messages per day, this is the first such deal with an operator, and it was followed quickly with the announcement of similar plans with Saudi operator Mobily. Its plans costs SAR 20 (EUR 4) per month for customers without a data plan and SAR 15 for those with a data subscription.

WhatsApp says in its defense that while it may be eroding operators' SMS revenues (see here for statistics in Hong Kong), it's also driving subscribers to take data plans. The new plans are the same, although stripped to only offer WhatsApp access. WhatsApp also allows users to send photos and videos, but subscribers who use this while roaming will quickly hit their data caps, set at 5MB on the Hong Kong roaming plan. The offer does appear to be a first step for some subscribers to a data subscription. A small test by Telecompaper found that Apple users spend around 45MB on WhatsApp each month, of which around 60-70 percent is over the mobile network and the rest via Wi-Fi.

The WhatsApp plans do raise questions of net neutrality. It may be innovative, but it's highly questionable whether they would be allowed under tough net neutrality rules, such as those in the Netherlands which restrict separate charging for specific online services. A counter-argument could be that it's difficult for start-ups in the voice-chat segment to reach these kind of deals with operators. WhatsApp has clearly passed that stage and reached the necessary scale and funding. In any event, WhatsApp's main focus is ensuring the long-term future of the company, as use of the app is in many cases still free.

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